San José, Costa Rica, since 1956

27 New Tech Firms Touched Down in 2007

One designs sophisticated breaking and transmission electronics. Another sterilizes medical equipment by bombarding it with an electron beam. Several others handle phone calls from around the world and do the back-office work for large multinationals.
They’re not your grandfather’s coffee plantation. They’re the new high-tech companies that opened operations in Costa Rica in 2007.
Altogether, 27 new service, medical supplies and electronics companies opened shop here last year, according to data presented by the Costa Rican Investment Promotion Agency (CINDE), a private company that works to attract high-tech services and manufacturing investment to the country.
The new companies represent a combined $421 million in investment and 6,352 additional skilled jobs, said Gabriela Llobet, CINDE’s director.
She especially noted the touchdown of companies like Continental AG – a German manufacturer of sophisticated car electronics – and BeamOne – a company that specializes in sterilizing already-packaged medical equipment using a beam of electrons.
“This is a market” still heavily dependent on contact centers and services, Llobet said.
“But also we’ve been able to accomplish a series of new niches for greater added value.” Llobet said Continental and BeamOne mark the entry and expansion, respectively, of two important niches: automotive manufacturing and medical supplies.
In terms of automotive manufacturing, Continental’s stated purpose with the new Costa Rica factory is to build parts to be shipped to the North American Free-Trade Agreement (NAFTA) countries.
At the announcement of the new investment in October, President Oscar Arias said the investment could be just the beginning of an arrival of auto parts manufacturers, companies that tend to flock together.
Meanwhile, Llobet said BeamOne represents an important step for the consolidation of medical supplies manufacturing in Costa Rica. Currently, medical supplies companies like global giant Boston Scientific have to ship their Costa Rican-made products to the United States for sterilization before they can be distributed.
“The fact that a sterilizing company has been installed allows us to skip that step,” Llobet said. It opens the door for Costa Rica to become a shipping and distribution hub for the industry, as well as a manufacturer.
While those niches are interesting, services like back office and call center companies continue to be the largest source of foreign direct investment and job creation in the high-tech sector.
Fourteen of the 27 new companies in 2007 were service-related, and represented about 5,000 new jobs.
The lineup included companies like DHL, which installed a back office center, and Teltech, which set up a contact center.
Llobet did sound a few cautionary notes.  She warned that Costa Rica has fallen behind Central American neighbors like Panama in speeding up its bureaucracy and making it easier to do business.
Last year, for example, Panama enacted a law that made it much easier to get foreigners into the country on work permits, a move that Llobet said looks like an attempt to attract the regional headquarters of multinationals.
“Migration shouldn’t be an obstacle,” she said of Costa Rica’s difficult migratory requirements.
Likewise, Llobet warned that Costa Rica’s education system is not training enough skilled workers to meet the demand. In 2006, the country’s universities graduated 1,800 engineers and 5,200 technicians – only half of what the market needed.
“We have great potential for growth and that’s the great news,” she said. “But we have to address those needs.”
For 2008, Llobet said CINDE will continue to focus on promoting the new market niches, as well as looking to countries other than the United States to promote Costa Rica as a destination for investment.
At the top of her list are countries like Spain, India and – especially – China, which Llobet singled out as an investment partner with a lot of potential at the moment, thanks to all the attention the Costa Rican and Chinese governments are paying to each other after forming diplomatic relations in 2007.
“There’s a great window of opportunity right now, partly from the point of view of the diplomatic relations.”

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